Altitude Group (ALT): Corp | Avingtrans (AVG): Corp | LPA Group (LPA): Corp | Open Orphan (ORPH): Corp | PCI Pal (PCIP): Corp | Photo-Me (PHTM): Corp
Companies: ALT AVG PHTM PCIP LPA ORPH
Photo-Me was trading in line with expectations until COVID-19 hit in the final months of FY 2020. FY 2020 sales declined by -5.6% to £215.4m including £22.7m sales lost due to COVID-19 as consumer activity was impacted significantly. The Board believes that activity levels could take a long time to return to pre-COVID-19 levels; a thorough review of the business is underway and restructuring programmes are being implemented to better align operations to the current trading conditions. Net cash at April 2020 was £7.9m, comprising gross cash of £66.5m and drawn debt facilities of £58.5m. A €30m additional credit facility was received in May and June.
Companies: Photo-Me International plc
Flowtech Fluidpower (FLO): Corp AGM trading update | Photo-Me (PHTM): Corp Demand for photo ID remains low
Companies: Flowtech Fluidpower plc (FLO:LON)Photo-Me International plc (PHTM:LON)
Alumasc (ALU): Corp | Photo-Me (PHTM): Corp
Companies: Alumasc Group plc (ALU:LON)Photo-Me International plc (PHTM:LON)
Mothercare (MTC): Corp | Photo-Me (PHTM): Corp
Companies: Photo-Me International plc (PHTM:LON)Mothercare plc (MTC:LON)
Photo-Me’s H1 results are solid with sales up +3.3% (-1.4% underlying), adj. PBT up +6.7% and FCF up +24.9%. Continental Europe led this growth through the acquisition of Sempa, the continued roll-out of Laundry and a better-than-expected photobooth performance in France. This was partly offset by challenges in the photobooth market in the UK. We expect these trends to continue, make no major changes to our full year forecasts and continue to highlight the 10% dividend yield (the interim dividend was held as expected) and the £25m net cash balance.
Photo-Me (PHTM): Corp Growth in Europe and Asia | Wameja (WJA): Corp HomeSend draws on facility for second time
Companies: Wameja Limited (WJA:LON)Photo-Me International plc (PHTM:LON)
eve Sleep (EVE): Corp H1 FY19 pre-close: Good broad-based progress | Minds + Machines (MMX): Corp Positive H1 trading update with new buyback announced | NAHL (NAH): Corp On track, evidence of success building gently | Photo-Me (PHTM): Corp Laundry remains the core growth driver | Scientific Digital Imaging (SDI): Corp FY results; acquisitions to fully benefit FY 2020 | SRT Marine Systems (SRT): Corp FY 2019 confirms step change from projects business
Companies: MMX PHTM SDI SRT NAH EVE
FY 2019 results are line with our revised expectations, save for a higher net cash balance (£16m) due to lower capital expenditure and cash tax. Free cash flow covered the dividend cost for the first time since FY 2016 and management has highlighted its intention to again hold the FY 2020 dividend. As previously highlighted, the UK suffered from Brexit-related uncertainty and weaker consumer demand. We have downgraded our EPS forecasts by 5%, assuming difficult UK conditions continue. Rolling forward our free cash flow and net cash based valuation model plus our revised short-term outlook edges down our target price from 155p to 150p.
Photo-Me has acquired 96% of Sempa, a manufacturer of commercialised fresh fruit vending equipment, based in France. The net cash consideration is €11.6m, and Sempa reported sales of €9.4m and PBT of €3.7m in 2018, meaning the group has paid an attractive 3.1x PBT. We have upgraded our FY 2020E EPS by 6% and we now forecast net cash of £10m at April 2019. We reiterate our view that the 10% dividend yield supported by a net cash balance should continue to provide good support for the shares that now have the added interest of potential growth in the large juice vending machine market.
Photo-Me (PHTM): Corp Entering a new, large market
Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m. Loungers plc—the operator of 146 café/bar/restaurants across England and Wales under the Lounge and Cosy Club brands, announces its intention to seek admission on AIM, offer to raise £61.6m at 200p with market cap of £185m, expected 29 April 2019. SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019. Distribution Finance Capital Holdings plc — specialist lender which builds relationships with manufacturers and then provides working capital solutions up and down their supply chains to drive their growth is looking to join AIM. No raise, secondary offering of £19.8m at 90p, expected market cap of £95.98m. Expected 09 May 2019.
Companies: DVO AIR PHTM MCON SXX SNX LOK SCLP
Chariot Oil & Gas (CHAR): Corp Changing the narrative | Photo-Me (PHTM): Corp UK more challenging
Companies: Chariot Oil & Gas Limited (CHAR:LON)Photo-Me International plc (PHTM:LON)
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H1 results show continued strong growth in Laundry and a faster than expected recovery in Japan but slower B2B and third party sales in the UK. These later two points are expected to improve in H2 and guidance for the full year is maintained but there is clearly some risk here. We retain our target price of 183p based on a 5% FY 2019E free cash flow yield.
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G4M’s H1 trading update confirms the continued strength of the top line sales growth already disclosed in its Q1 sales update. H1 sales have risen by an impressive 42% to £70.2m, complemented by gross margin expansion of 330bps to 28.5%, reflecting G4M’s focus on profitable sales growth. This translates to gross profit growth of £7.5m (+60%) compared with last year and will deliver interim financial results materially higher than last year. While sales momentum has continued into October, management remains mindful of the ongoing uncertainties around Covid-19 and Brexit heading into the peak trading period. With market estimates already raised on the Q1 update, this prudent caution tempers our full year PBT upgrade to 13%.
Companies: Gear4music (Holdings) PLC
REACT Group plc (REACT), the specialists in deep cleaning services for customers in the public and private sectors, has announced an encouragingly positive trading update for the financial year to September 2020 stating that the Group’s maiden profit before tax will be ahead of market expectations. Consequently we are raising our PBT forecast from £152k to £182k. Cash balances at the year-end were also higher than forecast at £1.8m and we continue to remain very positive on the prospects for the Group.
Companies: REACT Group Plc
Gear4music continued its recent run of positive news announcements yesterday with an upbeat AGM trading statement. Growth, following an exceptional first quarter in FY2021 (April to June), remained brisk in July and August. Moreover, the company’s strong sales momentum is more than matched by improvements on costs and margins.
Guild Esports is positioned to become the leading global esports brand based in the UK. With strong support from David Beckham, the company plans to pioneer the UK Premier League academy model in esports, attract leading sponsors, build a loyal fan base and establish a premium line of merchandise. Within 12 months of the IPO, Guild plans to contract 19 esports staff, register 1m fans and generate £5m sponsorship revenue, £1m merchandise revenue and £0.6m media revenue. Today, Guild announced a £3.6m three-year sponsorship deal with a new European fintech company and appears well positioned to meet its sponsorship revenue target.
Companies: Guild Esports PLC
Pendragon was making good progress in its turnaround when COVID-19 struck but appears to be coming through the crisis in good shape to date. Despite a £44m hit to profits during lockdown, we can envisage a modest underlying profit for the full year without further shocks. Today’s IMS is supportive of this view. The group’s new strategy should help deliver a transformation in the value of the business, long-term. The potential is not reflected in the current price which is weighed down by macro worries and misplaced concerns about debt. We see the risk/reward balance as attractive.
Companies: Pendragon PLC
Gear4music reports that trading has remained strong in the 1st 2 months of Q2. Back in July it said it had achieved 68% sales growth in Q1 (to 30 June) along with improved gross margins and cost efficiency, notably in marketing. Today’s update says G4M is continuing to generate improved margins alongside proportionally lower marketing costs YoY, no doubt with additional operating leverage in other cost lines too. As a result, FY21 results “will be at least in line with recently upgraded expectations”. We make no changes today, pending an H1 trading update on 22 Oct, but highlight that forecast and valuation risk is very much to the upside. Time to take a look for those that haven’t yet.
Escape Hunt announced the acquisition of its Middle East master franchise partner, Escape Hunt Entertainment LLC (“EHE”). The operation offers high potential returns at modest cost and risk to Escape Hunt. The transaction also pushes the company’s rollout ahead of our forecasts. Such acquisition opportunities, combined with attractive new lease terms and rebounding early demand, position the company for strong return potential.
Companies: Escape Hunt Plc
N Brown is taking crucial steps in its transition to being a pure-play online retailer (currently 77% of sales) and to strengthen its leading position in the under-serviced market for fashionable plus-size apparel. While strategic updates may be on hold until a new CEO is appointed, the company closed the loss-making portfolio of high-street stores in H119 and further brand consolidation seems inevitable. The shares trade on a low FY19e P/E of 5.5x and yield 7.2%.
Companies: BWNG BGUA NBRNF
In this note and following the SMMT June data released earlier this week, we look at the key dynamics of the sector during H1 2020, and the prospects for the rest of the calendar year. While no direct stimulus for the sector was announced in the recent summer statement, customers who were considering their purchasing options now have the clarity to move ahead with buying decisions that were potentially on hold.
Companies: CAMB LOOK MMH PDG VTU
Gear4music is the leading UK online retailer of musical instruments and music equipment and has established operating bases in Sweden and Germany to spearhead its expansion into mainland Europe. It operates a low-cost model, with further efficiency gains targeted, and is profitable from the first customer transaction, achieving a 250% gross margin return on its marketing investment in new customer acquisition.
The final results revealed adjusted PBT up 99% year-on-year, which was 10% better than forecast despite four upgrades during the financial year. This strong performance reflects the financial benefits that have accrued following the shift in the business model to online only, as well as management’s strategic decision to significantly increase marketing spend. A second special dividend for the 2020 financial year has also been announced, reflecting the strong cash flow characteristics of the business model. Our 2021 profit forecast implies continuing momentum and a year-on-year increase in PBT of 86%. We raise our target price to 1050p.
Companies: Best of the Best plc
We are introducing our Best Ideas for 2019 and also review the performance of last year’s picks. We suggest ten solidly financed stocks with good business dynamics that ought to be considered for core portfolio holdings and six UK domestically focused stocks that our analysts believe should perform strongly in the event that uncertainties unwind. We also introduce a new style of research from N+1 Singer which presents a Company’s dynamics and metrics in a clear and concise manner and concentrates on the pivotal issues affecting that Company and an investment decision.
Companies: BCA CLIN CLG CBP DNLM EAH STU FCRM FUTR GTLY INS GLE NICL SDL SPR TRI
The global online gaming market generated c £40bn of gross gaming revenues (GGR) in 2018 and newly regulating markets (the US) are expected to contribute to 7% CAGR to 2023 (according to H2 Gambling Capital (H2GC)). However, while regulated markets have provided significant opportunities for operators to date, government intervention remains a constant threat and legislation is tightening. Some mature markets (notably the UK) have been raising taxes and implementing regulatory burdens, which increases the cost of business. In our view, success will depend on a combination of scale, diversification, proprietary technology and a strong balance sheet. Many of the 12 operators in this report should benefit from these dynamics and sector valuations remain attractive, at 12.6x P/E, 8.2x EV/EBITDA and 6.0% dividend yield for FY19.
Companies: 888 BAH ORPH GVC GYS OPAP PTEC RNK WMH
Disney+ hits 22m mobile users, SoftBank backed firm downsizes IPO, German mobile carrier selects Huawei
Companies: ENET 7DIG MVR ZOO ZOO AMO BOOM MIRA MWE
Gear4music, which reported positively on FY2020 profits in its recent 23rd June 2020 results announcement, released further good news today. The company already stated that FY2021 had started on an exceptionally strong note for sales revenue. But profitability – an upgraded priority in the past 18 months – now looks to be ahead of expectations. We raise our forecasts on this report.